Global supply chain’s test with regional war…

05 April 20227 min reading

“In our country, which is the most critical transit point in the world in railroad transportation, the share of railroads in export shipments is below 1 percent according to 2020 figures. Road investments should now come to an end and investments should be made to increase railway transportation.” 

Haldun Kavrar 
General Manager
ATF Forwarding 

There are many similarities between the functioning of the world trade and the functioning of the human body. In the human body, the heart pumps oxygen-laden red blood cells into the cells. Similarly, China (the heart) pumps the products (oxygen) it produces for almost the whole world with ships/containers (red blood cells) to those countries (cells). 

After unloading these ships/containers that bring cheap products to them, countries send them back to China (the heart). Most of the time, the raw material (carbon dioxide) is transported in these empty turns.

If we consider that 87% of world trade is carried out by sea, we can understand how vital the circulation mentioned above is.

Due to the Covid-19 pandemic, China closed itself to the world in 2020. All production stopped and the Chinese were confined to their homes. That is, the heart had stopped.

The heart had stopped, but the cells were continuing their normal lives. Cells need oxygen to continue their lives, but the heart stopped and could not pump oxygen to the cells with red blood cells. In other words, container shipments from China had stopped.

Afterwards, the pandemic spread to Europe, North America and other countries. Almost all countries closed themselves. While all these lockdowns were taking place, China partially got out of the pandemic. This time the situation was reversed. While the heart was pumping oxygen to the cells, the cells could not consume the oxygen that came to them. Containers shipped from China were kept full at destination ports. However, they could not be emptied and shipped back to China.

Due to the pandemic, central banks funded the markets with huge amounts of money. Governments provided their citizens with opportunities to consume, paid them salaries or sent them welfare checks even though they were not working, in order to prevent the economic collapse. Increased consumption meant that the heart pumped much more oxygen into the cells. Neither the heart had the power to pump that much oxygen, nor did the cells have a place to store that much oxygen.

As a result, the Shanghai Container Freight Index rose unprecedentedly during the pandemic. In some regions, container freights increased 7-8 times. Problems such as empty containers and scarcity of space in vessels arose.

The “First World Trade War” and the struggle for logistical supremacy

As the COVID-19 pandemic is coming to an end, Russia, unexpectedly, attacked Ukraine and officially started the “First World Trade War”.

The United States was trying to curb China’s economic growth by keeping the straits under control. The USA controls the Yellow Sea by exploiting North Korea as an excuse, the Yemen Sea by exploiting the Somali pirates and the Yemeni Civil War as an excuse, the Suez Canal thanks to the military government in Egypt, and the Panama Canal by occupying Panama.

To sustain its economic growth, China has to increase its exports and to increase its exports, it has to be able to deliver its products to foreign markets. All the straits that must be crossed to ship its products are under American control. 

Belt and Road Initiative, the Middle Corridor and Turkey

As such, China launched the “Belt and Road Initiative”. Thanks to this project, the products produced in the inner parts of China would be shipped to the European market by using the land route, especially the railway. With this route, the straits under the control of the USA would be bypassed.

The USA and European countries have put an economic embargo on Iran - which Europe was rather reluctant in this regard - making the Silk Road passing through Iran dysfunctional.

When the route to Iran was made unusable, China started to ship products to the European market this time via the Northern Corridor, that is, Russia. About 5,000 trains run annually between Germany and China. With each passing year, there has been an increase in train services.

Together with the Northern Corridor, the Baku-Tbilisi-Kars railway was built and the Trans-Caspian Railway Line (Middle Corridor) was commissioned. In the Central Corridor, the Eurasia Tunnel and the Third Bosporus Bridge (which is planned to be crossed by a railway line) are of vital importance.

Aiming to corner China economically, the USA provoked Russia to attack Ukraine by using the “NATO” card. In the end, Russia attacked Ukraine, an embargo similar to the one on Iran has begun to be implemented against Russia, and the Northern Corridor, with 5,000 train services per year, became dysfunctional just like the Southern Corridor. Russian airspace has similarly become dysfunctional.

Turkey can become a global transit center with railway investments

When the North and South Corridors lost their functions, the Middle Corridor, which is the key transit point for our country, has become more important than ever.

The “Peace” oriented stance that our country has demonstrated in recent days and which is appreciated by the whole world, needs to continue.

In our country, which is the most critical transit point in the world in railroad transportation, the share of railroads in export shipments is below 1 percent according to 2020 figures. Road investments should now come to an end and investments should be made to increase railway transportation. 

The Yavuz Sultan Selim Bridge railway line, of which feasibility studies have been completed, has to come to an end. Investments in high-speed trains made for passenger transportation should be initiated for cargo transportation as well. The transition to the Green Economy should be accelerated by investing in electric locomotives and electric railroads.

To reach the goal of a “prosperous country” that Atatürk has set years ago, we have to take advantage of this important opportunity that comes our way definitely. No matter how strong we are in production, if we cannot reach the target markets, we will not be able to complete our economic development.

I would like to finish my article with a quote from Atatürk: Peace at home, peace in the world!

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